Wall Street Set To Start Lower As Risk Aversion Continues

Early indications suggest that Wall Street stocks may open Thursday’s session modestly lower, as risk aversion continues to unnerve investors. After Asian stocks closed mixed, the European markets are retreating in volatile trading. Commodities are firmer as the dollar has lost ground, except against commodity currencies. The Norwegian central bank unexpectedly lowered its key interest rates to a record low of 0.75 percent and German economic data released today were mixed. Consumer sentiment in Europe’s largest economy is set to recede in October, while business sentiment unexpectedly improved in September. The domestic markets may also focus on economic data on durable goods orders, jobless claims and new home sales.

At 6:15 am ET, the Dow futures are declining 33 points, the S&P 500 futures are moving down 4.50 points and the Nasdaq 100 futures are losing 14.25 points.

U.S. stocks closed a lackluster session on Wednesday lower, as mixed global manufacturing data triggered anxiety among traders.

On the economic front, the Commerce Department is set to release its durable goods orders report for August at 8:30 am ET. Economists expect a 2 percent month-over-month drop in orders, while excluding transportation orders may haven risen 0.3 percent.

Around the same time, the Labor Department is scheduled to release its jobless claims report for the week ended August 19th. The consensus estimate calls for an increase in claims to 275,000 from 264,000 in the previous week.

The Commerce Department will also release its new home sales report for August at 10 am ET. Economists expect new home sales to come in at a seasonally adjusted annual rate of 515,000 for the month. The Treasury will release the results of its auction of 7-year note at 1 pm ET.

Federal Reserve Chair Janet Yellen is scheduled to speak at the University of Massachusetts, Amherst at 5 pm ET.

In corporate news, H.B. Fuller’s (FUL) third quarter adjusted earnings and revenues trailed expectations. The company also lowered its 2015 guidance once again, citing softer than expected revenues in its Americas operating segment and a slightly higher tax rate.

Worthington (WOR) reported better than expected first quarter adjusted earnings, while its revenues missed estimates. Steelcase (SCS) reported better than expected second quarter adjusted earnings and revenues. The company’s third quarter guidance was in line.

AAR (AIR), Bed Bath & Beyond (BBBY), Cintas (CTAS), Jabil Circuit (JBL), NIKE (NKE) and Pier 1 Imports (PIR) are among the companies due to release their quarterly results after the close of trading.

The Asian markets ended mixed, with the Australian, Chinese, Indian, South Korean and New Zealand markets advanced, while most other markets retreated. Even as risk aversion weighed down on the markets, a rebound by commodities generated strength in some markets.

The Japanese market, which opened after a 3-session break, fell notably, as the yen was firmer in response to the risk aversion. The Nikkei 225 average ended down 498.38 points or 2.76 percent at 17,572. Hong Kong’s Hang Seng Index ended at 21,096, down 206.93 points or 0.97 percent, while China’s Shanghai Composite Index added 26.80 points or 0.86 percent before ending at 3,143.

Australia’s All Ordinaries hovered in positive territory throughout the session before ending up 69.80 points or 1.39 percent at 5,102. The market witnessed broad based strength, with consumer staple, real estate, telecom and utility stocks gaining solid ground.

On the economic front, flash estimate released by Markit Economics and the Nikkei showed that the manufacturing PMI for Japan slipped to 51.2 in September from 51.7 in August. A report released by the Japanese Ministry of Economy, Trade and Industry showed that all industry activity in Japan rose for the second straight month in July.

European stocks experienced some volatility in early trading and are currently modestly lower as traders react to the risk aversion that is still in play and a few key domestic economic data and corporate tidings.

In corporate news, travel and tour operator Thomas Cook announced that summer holiday sales were in line with expectations and winter trading has also started on a firm note. The company sees full year sales in line with expectations. Swedish retailer H&M reported a 12 percent increase in sales in local currencies in September compared to a mere 1 percent increase in August. Third quarter profit flat lined, weighed down by a firmer dollar. Ryanair said it would raise its traffic forecast for the year to 104 million and profit guidance by 25 percent.

On the economic front, the GfK reported that German consumer confidence is set to weaken in October. The forward-looking consumer sentiment index is expected to drop to 9.6 in October from 9.9 in September, while economists expected a reading of 9.8.

Meanwhile, the IfO Institute’s business sentiment index for Germany unexpectedly increased in September. The index rose to 108.5 in September from 108.3 in August, while it was expected to drop to 107.9.

French business confidence reached the highest level in more than four years in September, the results of a survey by statistical office Insee showed. The business sentiment index for manufacturers improved to 104 in September from 103 in August. Economists had forecast the indicator to remain unchanged at 103.

The British Bankers’ Association said that gross mortgage borrowing in the U.K. rose an annual 14 percent in August to reach GBP 12.2 billion, marking the largest increase since 2008.

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